Business Specialties Investments
Nov 30, 2007
By: Gail Kalinoski, Contributing Editor
The ongoing credit crunch helped Lightstone Value Real Estate Investment Trust Inc. close a $96.25 million deal with Camden Property Trust for a portfolio of five apartment communities in Tampa, Charlotte, N.C., and Greensboro, N.C., a Lightstone Group executive told CPN today.
“The timing was really great for us. We were able to take advantage of the credit crunch instead of sitting on the sidelines,” said Lori Casey, vice president of acquisitions.
Casey said keys to making the deal were Lightstone's cash on hand and ability to close quickly as it exhibited during its $8 billion acquisition earlier this year of the Extended Stay hotels from affiliates of the Blackstone Group. She said Houston-based Camden wanted to close on the properties within 30 days, which would have been a problem for some companies but wasn't for Lightstone.
Closing in 30 days “was the most important thing (for Camden) because of the markets being in turmoil,” she added.
Initially marketed as three separate purchases, Casey said Lightstone preferred to buy the properties in one portfolio. “There are efficiencies in buying a portfolio,” she said.
As reported Nov. 21 in CPN, the properties Camden sold had a total of 1,576 apartments and included: Camden Isles, 484 units in Tampa now known as Beacon Isles; Wendover, 216 units in Greensboro; and Camden Glen, now called Beacon Glen, 304 units also in Greensboro. Two properties in Charlotte were also sold to Lightstone: Timber Creek with 352 units and Eastchase with 220 units.
Casey said the properties are all centrally located and have an average occupancy rate of 94 percent. Lightstone plans to make significant interior renovations over the next three years. She did not have an estimate available but said it would include upgrading appliances and cabinets. She declined to release average rents, but said cash flow from the rents is good and would improve once the renovations were completed.
Joshua Kornberg, the REIT's director of investments, noted in a release that comparable properties in the three markets with interior and amenity upgrades are charging $40 to $100 more per unit.
“Over the next few years, we anticipate an increase in rents from expected supply and demand changes such as (more) renters due to the increased cost of home ownership,” he added.
Casey said Lightstone secured a fixed-rate mortgage of 5.4 percent from Fannie Mae through Wachovia. The portfolio has a capitalization rate of 7.4 percent, she added.
Beacon Property Management L.L.C., an affiliate of The Lightstone Group, will manage the five apartment complexes.
Lightstone now owns 26,000 apartment units in Alabama, Florida, Tennessee, Indiana, Illinois, Maryland, Michigan, New York, New Jersey, North Carolina and Pennsylvania. Casey, who said she is actively scouting properties that had deals fall through due to the credit situation, noted that Lightstone would like to add multi-family units in Raleigh, N.C., and on the West Coast, particularly the Seattle area.
“I'd like to head to Atlanta if the pricing becomes more realistic,” she added.
Lightstone Value REIT recently made its first foray into the hospitality market by acquiring two Baymont Inn & Suites hotels in Texas. CPN reported Oct. 26 that the hotels in Katy and Sugar Land will be renovated and repositioned as Extended Stay Deluxe hotels. An affiliate of The Lightstone Group and Arbor Realty Trust Inc. closed on the $8 billion acquisition of the Extended Stay Hotels from affiliates of the Blackstone Group in June, according to a June 12 CPN story. The chain has more than 680 hotels and approximately 76,000 rooms located in the United States and Canada. Because most of the profits from Extended Stay's hotels come from room rentals, the business model is similar to apartments, Lightstone officials have said.
By: Gail Kalinoski, Contributing Editor
The ongoing credit crunch helped Lightstone Value Real Estate Investment Trust Inc. close a $96.25 million deal with Camden Property Trust for a portfolio of five apartment communities in Tampa, Charlotte, N.C., and Greensboro, N.C., a Lightstone Group executive told CPN today.“The timing was really great for us. We were able to take advantage of the credit crunch instead of sitting on the sidelines,” said Lori Casey, vice president of acquisitions.
Casey said keys to making the deal were Lightstone's cash on hand and ability to close quickly as it exhibited during its $8 billion acquisition earlier this year of the Extended Stay hotels from affiliates of the Blackstone Group. She said Houston-based Camden wanted to close on the properties within 30 days, which would have been a problem for some companies but wasn't for Lightstone.
Closing in 30 days “was the most important thing (for Camden) because of the markets being in turmoil,” she added.
Initially marketed as three separate purchases, Casey said Lightstone preferred to buy the properties in one portfolio. “There are efficiencies in buying a portfolio,” she said.
As reported Nov. 21 in CPN, the properties Camden sold had a total of 1,576 apartments and included: Camden Isles, 484 units in Tampa now known as Beacon Isles; Wendover, 216 units in Greensboro; and Camden Glen, now called Beacon Glen, 304 units also in Greensboro. Two properties in Charlotte were also sold to Lightstone: Timber Creek with 352 units and Eastchase with 220 units.
Casey said the properties are all centrally located and have an average occupancy rate of 94 percent. Lightstone plans to make significant interior renovations over the next three years. She did not have an estimate available but said it would include upgrading appliances and cabinets. She declined to release average rents, but said cash flow from the rents is good and would improve once the renovations were completed.
Joshua Kornberg, the REIT's director of investments, noted in a release that comparable properties in the three markets with interior and amenity upgrades are charging $40 to $100 more per unit.
“Over the next few years, we anticipate an increase in rents from expected supply and demand changes such as (more) renters due to the increased cost of home ownership,” he added.
Casey said Lightstone secured a fixed-rate mortgage of 5.4 percent from Fannie Mae through Wachovia. The portfolio has a capitalization rate of 7.4 percent, she added.
Beacon Property Management L.L.C., an affiliate of The Lightstone Group, will manage the five apartment complexes.
Lightstone now owns 26,000 apartment units in Alabama, Florida, Tennessee, Indiana, Illinois, Maryland, Michigan, New York, New Jersey, North Carolina and Pennsylvania. Casey, who said she is actively scouting properties that had deals fall through due to the credit situation, noted that Lightstone would like to add multi-family units in Raleigh, N.C., and on the West Coast, particularly the Seattle area.
“I'd like to head to Atlanta if the pricing becomes more realistic,” she added.
Lightstone Value REIT recently made its first foray into the hospitality market by acquiring two Baymont Inn & Suites hotels in Texas. CPN reported Oct. 26 that the hotels in Katy and Sugar Land will be renovated and repositioned as Extended Stay Deluxe hotels. An affiliate of The Lightstone Group and Arbor Realty Trust Inc. closed on the $8 billion acquisition of the Extended Stay Hotels from affiliates of the Blackstone Group in June, according to a June 12 CPN story. The chain has more than 680 hotels and approximately 76,000 rooms located in the United States and Canada. Because most of the profits from Extended Stay's hotels come from room rentals, the business model is similar to apartments, Lightstone officials have said.
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